Us Nero Giardini

PAULO ALVES – CARLO FOCE – ZHONGHUA LIU

INTERNATIONALIZATION PLAN TO THE USA

NERO GIARDINI

HOW TO DO BUSINESS IN THE USA

Slide 2

INTERNATIONALIZATION STRATEGY

1

2

3

4

OVERVIEW

COMPANY’S DESCRIPTION

US FOOTWEAR OUTLOOK

MARKET ATTRACTIVENESS

5

RECOMMENDATIONS 6

AGENDA

11/12/2013 Doing business in the USA - Université Laval 3

-  SHOES INDUSTRY

-  MEDIUM-HIGH SEGMENT

-  100% MADE IN ITALY

-  REVENUES OF €230 MILLION

-  PRESENT IN 8 EUROPEAN COUNTRIES

-  STRONG BRAND REPUTATION

OVERVIEW

Slide 4

COMPANY’S DESCRIPTION


HISTORY

1975FOUNDATION

1990RESTRUCTURATION

1998UNIQUE

SHAREHOLDER

2005BUSINESS

INTERNATIONALIZATION


VISION, MISSION & VALUES

“100% MADE IN ITALY QUALITY AT AN AFFORDABLE PRICE”

“BECAME A MULTINATIONAL ITALIAN COMPANY EXPORTING ALL OVER THE WORLD”

“POWERING AND VALORIZING THE

COMPANY’S REGION”


CORE COMPETENCIES

STRENGTHS

CORE COMPETENCIES*Value Creation

for the CustomerDifficult

To ImitateAccess

New Markets

Brand Reputation ✓ ✓ ✓

Quality Management ✓ ✓ ✓

Production Cost Management ✓ ✓ ✓

Wide distribution Channel ✓ ✓ ✗

Fashionable Product Line ✓ ✗ ✗

* In order to be considered a core competency it must fulfill the three dimensions

RESOURCES HUMAN -‐  300 SPECIALIZED MANPOWER

ORGANIZATIONAL -‐  ECONOMIES OF SCALE, EXPERIENCE, AND SCOPE -‐  NEW LOGISTICS CENTER OF 12 000 MT2

FINANCIAL -‐  EXTRA CASH FLOW FROM THE LAST 10 YEARS


OBJECTIVES

OBJECTIVE TODAY 2015

NEW FRANCHISING SHOPS 35 300

INCREASE EXPORT REVENUES 10% 35% -45%

INCREASE TOTAL REVENUES 230 MILLIONS 500 MILLIONS

NEW ABROAD FLAGSHIP SHOP 15 MILLION INVESTED 100 CHINA, 2 RUSSIA, 3 PRAGUE, 10 MOROCCO


BUSINESS MODEL

VALUE PROPOSITION COSTUMER RELATIONSHIP

DISTRIBUTION CHANNELS

COSTUMER SEGMENTS

KEY RESOURCES

KEY ACTIVITIESPARTNERS

COST STRUCTURE REVENUE STRUCTURE

MAN – HIGH QUALITY ORIENTED

WOMAN – HIGH QUALITY ORIENTED

KIDS – HIGH QUALITY ORIENTED

MASSIVE ADVERTISING ON JOURNAL AND TV

RETAILS (81%)

FRANCHISING (16%)

FLAGSHIP STORE (3%)

PRODUCTION

QUALITY CONTROL

PROMOTION

BRAND

FACTORY AND ECONOMICS OF

SCALE

RETAILER

COMPONENT SUPPLIER

ADVERTISING AGENCY

FACTORY AND EMPLOYEE PROMOTION COMPONENT

SUPPLYEDDIRECT SALES

(3%)FRANCHISING SALES (16%) RETAIL (81%)

FASHIONABLE AND HIGH

QUALITY SHOES AT AN

AFFORDABLE PRICE

Slide 10

US VS. ITALIAN CULTURE


HOFSTEDE

40

91

62

46

29

50

7670

75

34

Power Distance Individualism Masculinty/Femininity Uncertainty Avoidance Long-term orientation

United States Italy


GLOBE

SOCIETY PRACTICES USA ITALY

PERFORMANCE ORIENTATION HIGH (4.49) LOW (3.58)

FUTURE ORIENTATION HIGH (4.15) LOW (3.25)

ASSERTIVENESS HIGH (4.55) HIGH (4.07)

HUMAN ORIENTATION LOW (4.17) LOW (3.63(

IT IS EASY TO MOTIVATE AMERICANS!

IT IS POSSIBLE TO BE MORE DEMANDING AND EXPECT MORE FLEXIBILITY FROM AMERICANS!


HALL

Ronen and Shenkar (1985)

USA

-  LOW CONTEXT

-  MONOCHROMIC

ITALY

-  HIGH CONTEXT

-  POLYCHROMIC

Slide 14

US FOOTWEAR OUTLOOK


DEMAND

US IS THE 2ND GREATEST CONSUMER OF SHOES IN THE WORLD


DEMAND

-  USD$48 BILLION INDUSTRY

-  GROWING AT A RATE OF 1.8% PER YEAR SINCE 2008

-  INTERNAL CONSUMER SPENDING EQUALS USD$20 BILLION

MEN'S&ATHLETIC&

20%&

WOMEN'S&CASUAL&17%&

WOMEN'S&DRESS&13%&

WOMEN'S&ATHLETIC&

10%&

MEN'S&CASUAL&9%&

MEN'S&DRESS&6%&

OTHERS&25%&

2012 FOOTWEAR MARKET SHARE BY TYPE OF PRODUCT

Source: Statisticbrain


SUPPLY


SUPPLY

MANUFACTURING

USD$2BILLION

CAGR (2008-2013) = -1.4%

RETAILING

SHOE STORES (54%)

GENERAL MERCHANDISE STORES (19%)

SPORTING GOODS STORES (7%)

NON-STORE RETAILERS (6%)

Source: IBIS world Source: StatisticBrain


MAIN PLAYERS

REGARDING 2010 SALES

USD$4.8 BILLIONUSD$3.3 BILLION

USD$2.27 BILLION

USD$3.6 BILLIONUSD$20.86 BILLIONUSD$16.68 BILLION


KEY SUCCESS FACTORS

ECONOMIES OF SCALE & SCOPE

ESTABLISHMENT OF BRAND NAMES

QUALITY

AUTOMATION

PLACEMENT

STYLE & INNOVATION

Slide 21

MARKET ATTRACTIVENESS


PESTLE

POLITICALLY STABLE

LOWER TAXES

PROJECTED GDP GROWTH AT 1.7% RATE UNTIL 2015

STRONG URBANIZATION

LOWER EXPENDITURE WITH LEISURE

STRONG SYSTEMS AUTOMATION

SHORTER PRODUCT LIFECYCLE

FLEXIBLE LABOR CONTRACTS


PORTER 5 FORCES

0.00

1.00

2.00

3.00

4.00

5.00

THREAT OF NEW ENTRANTS

THREAT OF SUBSTITUTES

BARGAINING POWER OF SUPPLIERS

BARGAINING POWER OF

BUYERS

RIVALRY AMONG EXISTING FIRMS

MODERATE COMPETITIVE LANDSCAPE


COMPANY GOALS VS. US MARKET

OBJECTIVES (2015) US MARKET

REVENUE €500 MILLION -  2ND GREATEST CONSUMER IN THE WORLD

EXPORT REVENUE

35%-‐45% OF THE REVENUES -  VALUE + LOWER TARIFFS + INSTITUTIONS

FRANCHISE 300 -  ENTREPRENEURIAL BEHAVIOR + STABLE, SAFE AND CREDIBLE COUNTRY


SWOT ANALYSIS

STRENGTHS WEAKNESSES

-  Brand Reputation-  Management Quality-  Cost Efficiency-  Wide distribution Channel-  Fashionable Product Line

OPPORTUNITIES THREATS

-  2nd greatest footwear consumer-  Similar Consumption cultures-  Greater demand for quality, stylish

and innovative products

-  Saturated and Slow Market Growth-  Constantly Shorter Product Life Cycle-  Demand is becoming less concerned

with material goods

Slide 26

INTERNATIONALIZATION STRATEGY


GOALS

DECREASE MARKET EXPOSURE

DECREASE COSTS

ACQUIRE RESOURCES

STIMULATE BRAND AWARENESS


GLOBAL INTEGRATION VS. LOCAL RESPONSIVENESS

NERO GIARDINI MUST CONSERVE ITS ITALIAN ESSENCE

CULTURE & HABITS

DESIGN & TASTE LANGUAGE SIZE &

PACKAGETECHNICAL

SYSTEMCLIENT &

APPLICATION

CONCEPT

PROMOTION X X X X

TECHNOLOGY X

PRODUCT X

ATTENTION: IT DOESN’T MEAN THE COMPANY DOESN’T NEED TO ADAPT TO THE CULTURAL DIFFERENCES FOR MANAGEMENT PURPOSES


GLOBAL INTEGRATION VS. LOCAL RESPONSIVENESS

NERO GIARDINI MUST CONSERVE ITS ITALIAN ESSENCE

LOCAL ADAPTATION

LOW HIGH

GLOBAL INTEGRATION

HIGH

LOW MULTI DOMESTIC

-  LOCAL TEAM

-  CONTROL AND MONITORING FROM HEADQUARTERS

-  PRODUCTS DEVELOPED FOR THE LOCAL MARKET AND THEN DIFFUSED TO US

Slide 30

RECOMMENDATIONS


RECOMMENDATIONS

ACQUIRE THE SERVICES OF A LAW FIRM

GET IN RELATION WITH TRADE ASSOCIATIONS

SEEK FOR EXPERT AND CUSTOMER INSIGHTS IN US

FORM A LOCAL TEAM WITH A LOCAL MANAGER

LOCATE IN HIGHLY POPULATED CITIES

CLEARLY SET GOALS, AWARDS AND DEADLINES FOR THE US TEAM

Slide 32THANK YOU FOR YOUR ATTENTION

ANY QUESTION? COMMENT?

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